NAB 'rejects' attempts by businessman to repay debt

NAB 'rejects' attempts by businessman to repay debt

By
Simon Bain

COMPLAINT: Iain Lindsay, who runs a holiday let in Perthshire, is in dispute with NAB. Picture: Kirsty Anderson

A BUSINESSMAN says he is unable to get on with his life because National Australia Bank has rejected his efforts to repay all of the money he owes it, and claims the lender is not honouring its promises to an MP.

Iain Lindsay, who runs a holiday let business in Perthshire, says his offer to repay his £1.4 million of borrowings to Clydesdale Bank owner NAB has been rejected because of a £100,000 "break fee" penalty.

Fixed-rate tailored business loans (TBLs) sold by Clydesdale Bank are under scrutiny by MPs in Scotland, England and Wales after the bank excluded them from its review of hedging product sales, despite their carrying the same penalties as other "more complex" products sold to small businesses.

Businesses that have joined Bully Banks and the NAB Customer Support Group complain they were not properly made aware of the penalties, although the bank denies this, and that the break fees have paralysed or undermined their businesses.

Mr Lindsay says: "I owe them £1.4m and have a plan to pay that back. I have had to reinvent myself and put in extra money to get my gearing right for new lenders to take on new facilities, and I have had to take money from my pension. But they will not allow me to do it."

The businessman says NAB is withdrawing his overdraft, asking for £182,000 on demand, and insisting on a break fee of around £100,000 if he makes early repayment of the outstanding £430,000 on his 10-year fixed rate TBL which matures in 2017.

Mr Lindsay, in common with many others, says the loan was sold him by an authorised Clydesdale treasury banker because it was derivative-related – a connection the bank con-tinues to deny – and that the detailed terms and conditions were sent to him "after the deal had been done".

Now a growing number of borrowers are complaining that since taking over the £5.6 billion commercial loan portfolio of Clydesdale and Yorkshire banks last summer, Australian parent NAB has been aggressive and inflexible.

Last November support group spokesman John Glare accused the bank of damaging the Scottish economy.

Mr Lindsay said: "I have got a good business, but I want to break the relationship with this bank, pay them all the money I owe, and get on with my life."

He said the bank had already been repaid £800,000, despite his overdraft rate rising from 1% to 5% after interest rates crashed.

"The bank are trying to revalue my properties and make me in breach of my terms and conditions as I fail to meet the revised LTV (loan to value) targets, therefore I am liable to pay my loans on demand and pay the break costs."

Mr Betts called for an investigation into NAB's activities in the commercial property market, after "dozens" of business customers told him the bank in Yorkshire was "aggressively calling in loans that have not yet reached their termination date".

After a meeting requested by Douglas Campbell, head of corporate support for Clydesdale and Yorkshire banks, and John Carter, head of commercial real estate for NAB, Mr Betts issued a statement, agreed with the bank. On the selling of TBLs, the banks said "all of the paperwork associated with their loans made it clear that no advice was being offered". Mr Betts disputed the bank's claim that TBLs were "not linked to identifiable swaps", because he saw "NAB's standard terms and conditions being invoked to have customers fund swap arrangements".

NAB assured the MP it "would not be seeking to wind up loans early by applying pressure through such means as revaluation, breach of covenant or withdrawal of overdraft facilities", and insisted "the discussions now being entered into with customers were designed to identify a mutually agreeable way forward".

Mr Betts, however, had warned the bank that "simply forcing businesses into liquidation would be unlikely in the present climate to realise more than a fraction of the money NAB is seeking to recover".

But Mr Lindsay says his offer to repay in full, followed by an offer to pay 60p in the pound on his overdraft but honour the terms of his TBL, have both been rejected. He has written to Scottish Finance Minister John Swinney: "It appears to me that all they wish to do is asset strip myself and my wife of any property and wealth I may have."

Clydesdale Bank said: "Mr Lindsay's two overdrafts expired last year. The ombudsman has already reviewed his complaint on this and ruled in the bank's favour. We have not demanded early repayment of Mr Lindsay's borrowing. Following an initial approach regarding repayment by Mr Lindsay, negotiations are ongoing to agree a settlement."

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